1. What is Income Tax?
A. It is the tax on Income Charged by the govt of India on the Assessee for the Income earned by such Assessee in India (even from Foreign Source) generally during the Previous year.
2. What do you mean by income earned in India?
A. Income Received in India either Generated from Source in India or Outside India and Income received Outside India whose source is From a Place in India is considered as Income Earned in India.
3. Who administers the Income-Tax Act?
A. Ministry of Finance Frames the Rules and Amends the Act from Time to time, generally it brings out its Tax Policy in Finance Bill in the Parliament of India Annually. Income Tax Department of India Looks after The administration Part of it.
4. What is the period for which a person’s income is taken into account for purpose of Income tax?
A. Generally, Period Starting from 1st April of the year to 31st March of subsequent year is taken into account to determine the Income of the Assessee and Tax is charged accordingly on the determined Income subjected to the provisions of the Income Tax Act.
5. What is an Assessment Year?
A.It is the year in which the tax is charged on Income generated in the previous year.
E.g. Year 2010-2011 is the Assessment year for the financial year 2009-2010 which means that you are liable to pay tax in the year 2010-2011 for the Income generated during the year 2009-2010. Similarly year 2011-2012 becomes Assessment year for the financial year 2010-2011 which means that you are liable to pay Tax in the year 2011-2012 on Income generated during the Financial Year 2010-2011.
6. Who is supposed to pay Income Tax?
A. Generally, Assesses whose Income is above the Basic Exemption Limit in such case the Assessee has to pay the tax on Such Excess Income over the Basic Exemption Limit. In Some Cases (Clubbing of Income) the Spouse or the Parents of the Children has to pay the Tax on Income earned by the Spouse and Children respectively.
7. Is Income tax Act applicable only to residents?
A. No, Income Tax Act is applicable to Non Residents also, Non Residential Status of an Assessee is determined as per the Income Tax Act
8. How can I know whether a company is resident or non-resident?
A. If the Company is Registered in India then it is Resident otherwise it is Non Resident generally you can find the words “Pvt. Ltd.” And “Ltd” at the end of the Company’s name which are registered in India.
9. Are all receipts considered as income?
A.No, all Receipts are not in the nature of Income. Only Receipts such as Income received on Performance of Skilful or non Skilful act such as Salary, Profit earned from the Business, Profit on Sale of an Asset, Income from any Deposits, Income in the form of Rent from House property, Income through Dividends and Interest on Investments, etc of the similar nature are considered as Income.
10. Is income tax levied on gifts received by a person?
A. No not all gifts are taxed,
a. Gifts from Relatives are tax free
b. Gifts from Non Relatives on Marriage occasion of the Assessee is Tax Free.
c. Gifts from Non Relatives if the total Gifts received in any form (Cash or Kind) in the year exceeds Rs 50,000/- then whole such Gift Amount is Taxable.
E.g.: 1. if you have received Gift from your Mom or Dad or any other relative then such gift is tax free.
2. If you have received Gift from your friend on your Marriage then such Amount received is tax free.
3. If you have received the Gift from your Friend (a Non-Relative) say Rs. 51000/- on any other day (the day other than your marriage occasion) then such Gift is taxable for whole Rs 51,000/- in the given case if you had received Rs 49,999/- then whole amount would be Tax Free.